Rent vs Buy: A Housing Analysis
Your Key to Understanding the Rent vs. Buy: A Housing Analysis
This analysis of the benefits of homeownership is presented by PMAR’s Public Relations Committee and is updated annually. This handout is intended to start a discussion with your clients about the general benefits of homeownership. Individual finances and tax brackets vary—the handout is intended as a general example only, not as personal financial advice.
How did we come up with the numbers? Below is a guide to how the figures were calculated.
- Annual Monthly Payments: Homeowner costs are based on the median home price in the Portland metropolitan area, 3.5% down payment, 30 year fixed mortgage at a 4% interest rate. Rent is calculated by searching for the average rent in the Portland area on a two-bedroom residence.
- Real Estate Taxes: Conducted a search on RMLSweb for homes listed at the area’s median home price; averaged a representative sample of property taxes to obtain average tax.
- Mortgage Interest Deduction: Used a mortgage amortization calculator to determine total interest payments on the mortgage loan. Assumed 30% combined (state and federal) income tax rate for the homeowner.
- Deduction for Property Taxes: Used the average property tax rate. Assumed 30% combined (state and federal) income tax rate for the homeowner.
- Mortgage Principal Accumulation: Determined through mortgage amortization calculator.
- Appreciation: Averaged annual appreciation from last ten years of year-end RMLS™ Market Action reports.